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Indonesia Looks To Exchange Nigeria’s Crude Oil For Palm Oil

As
global sales of palm oil dwindle, Indonesia, the world’s largest
producer of palm oil said it will look to do barter trades to increase
sales of the commodity.

The country is looking at exchanging palm
oil for crude oil with countries such as Nigeria and even airplanes
with EU countries for its national carriers.

Indonesia’s Trade
Minister Enggartiasto Lukita said in a statement issued to Reuters that
it has signed a preliminary deal last month with Russia’s Rostec to
exchange commodities, including palm, as part of a $1.14 billion payment
for 11 Sukhoi jets.

The major cause of the waning demand has
been attributed to the fall in demand from European Union countries.
According to Reuters report, the European Union is the second-largest
palm oil export destination after India for both Malaysia and Indonesia,
which dominate production in a global market worth at least $40
billion.

Unfortunately for Indonesia and Malaysia, two of the
world’s largest producers; palm oil has come under increasing fire in
Europe over its impact on forest destruction, encouraging producers to
look at new markets ranging from Africa to Myanmar.

To further
push its agenda, Indonesia’s Vegetable Oil Association executive
director Sahat Sinaga said palm oil producers will open a marketing and
research company in Russia, aiming to increase exports of 920,000 tonnes
in 2016 by 4-5 percent per year up to 2023.

The group is also
planning to open a storage facility in Pakistan, which imports 1-2
million tonnes of palm from Indonesia a year, anticipating further
growth in demand.

Malaysia, the world’s second largest producer
is said to be more vulnerable. Malaysia is said to be looking at
exploring trade opportunities within its region with countries such as
Myanmar, the Philippines, and West Africa. Malaysia has not stated its
approach. However, Reuters’ data shows that Malaysia is more reliant on
palm oil exports than Indonesia, shipping out more than 90 percent of
its palm oil last year, compared to about 70 percent in Indonesia.

It
is not clear if Nigeria is disposed to the deal as the country’s palm
oil production has increased since a Forex crisis precipitated by the
recession discouraged palm oil importers from increasing their volume.

As
a reality check, Presco and Okomu Oil, two of Nigeria’s largest palm
oil producers. Presco in its 2016 third quarter result said its net
profit surged by 49% year on year. Presco’s Revenue for the third
quarter of the year rose to NGN11,9 billion. Last year, the company only
reported NGN8 billion. Okomu Oil also witnessed a significant increase
in its result.

However, Nigeria’s local production which has been
estimated at 970 million metric tonnes according to data collected by
Index Mundi, the country’s consumption far exceeds the local production.

For
a country which used to be the largest exporter of the commodity,
analysts who spoke to PageOne.ng said going cap in hand to exchange
crude oil for palm oil will further hurt the local economy especially
local producers who are regaining their production strength.

Acting
President Yemi Osinbajo, SAN, has assured the nation that President
Muhammadu Buhari is hale and hearty and would return home as soon as he
completes the necessary tests recommended by his doctors in the United
Kingdom.

Prof. Osinbajo gave the assurance on Monday when State
House correspondents approached him for a chat shortly after his
telephone conversation with the president.